For real estate deals involving borrowing from banks or hard money lenders, a deed of trust is used. Deeds must be registered to identify the first lien holder with the county recorder. The lien on the property is revoked when the debt is repaid and the deed becomes void.Feel free to find more information at Oceanside Power of Attorney.
A deed of confidence is equivalent to a mortgage note in the simplest terms. A Trustee is appointed until the loan is repaid to keep the real estate note. Usually, trustees are the title corporation, but they may be another separate body.
A trust deed is used to transfer the title to the trustee and grant the lender the rights of the beneficiary. Lenders are listed on the deed as a secured creditor, so if borrowers default on their loan, they are insured. To protect the mortgage note, real property is used as collateral. The trustee will foreclose on the property and take custody if borrowers default on loan payments.
Lenders give a promissory note, which is used for deeds in combination. This document contains descriptions of the financial liability of the creditor. It should include the amount of borrowed money, interest rate, amounts and dates of payment, default clause, and penalty for prepayment.
Since promissory notes and trust deeds are legal documents, reading and knowing what is included is imperative. Many individuals find it convenient to employ a real estate lawyer to review contracts before signing them.
People can at the very least, read documents to make sure everything is right. Make sure the name and property address of the creditor are pronounced correctly. Look at the names of the borrower and the trustee. Examination, along with prepayment and default clauses, the sum of borrowed funds and interest rate.
Protecting deeded land with a revocable living trust is advisable. There must however, be some steps taken. Usually, banks do not offer property finance for property backed by a trust.
The workaround is to have a lawyer write a letter of legal opinion that specifies that clauses to protect the lender are included. Opinion letters are subject to a review process by bank committees and approval and closing procedures will be extended.
Colleen Marie & Associates
1470 Powell Rd., Oceanside, California 92056